A market for ecosystem goods and services following the restoration of natural capital: Volume 1: Main Report

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The specific objectives of this study were to conduct ecological, hydrological, and socio-economic assessments to determine the impact of restoration at several existing ecologically and socio-economically different restoration sites by comparing them with degraded or un-restored areas in close proximity. The outputs from these studies were used to develop an integrated system dynamics model on the likely impact of restoration on the ecology, hydrology and economy of notably agriculture. The research team identified eight existing restoration sites that were well established and that had significant/sufficient supporting data. An ecological, hydrological and economic assessment of the impact of restoration on ecosystem function was done. A summary of the classification of projects suggests that those with the highest potential payoffs (the pearl projects) are the water projects, in other words those projects where downstream water consumers benefit from the restoration project. The Agulhas, Beaufort West, Kromme and Sand study sites are all examples of this. This study provided unique perspectives in that it was reflective, and multi-disciplinary. The study demonstrated that standard economic evaluation methods have limited ability to take system dynamics into account and could, therefore, easily misdirect or reject investment in restoration, potentially leading to disastrous social and ecological consequences. Using the proposed decision-making framework with respect to the development of markets/payment systems for ecosystem goods and services following restoration can now be taken against the backdrop of the risk involved in achieving such rewards or benefits. Neither systems dynamic approaches nor risk quantification by themselves are new, but applications to existing and on-going restoration projects are novel. This study has contributed to the science and practice of restoration through such an evidence-based approach to integrating economic evaluation and ecosystems dynamics. The report makes various technical and policy recommendations.